All Forum Posts by: Irina Belkofer

@Adam Scheetz you need to verify all numbers: cost of rehab $20K is very low when you're buying house with ARV as high as $260K. Usually it's realistically 60-70% or ARV what your all-in would be.

Then, monthly rents looks too high as well - check at least Zillow and takes the most conservative estimate.

@Mark Hughes numbers look very realistic and still make sense.

Yours look too good to be true.

Make it a master lease with their portion or rent for each tenant but all are liable for entire amount.

Make the parents co sign for these with bad credit or no credit. If they deposit their money separately - increase the rent by 5-10%. If one is late, ALL of them pay late fees - it makes 4-times late fees.

So, let's say, you have $1600/mo rental - then each has to qualify for 3-4 rents income on their part $400*3=$1200 with good credit.

If they choose to deposit separately - it's $440/mo. Young people are very good with apps on the phone - they all deposit with CashApp, for example. If on the first you don't see one of the $440 pending in your CashApp - text all 4 of them that they ARE ALL being late on Rent and late fees for EACH will be $40 as of 4th or whatever the day on your lease.

There are landlords who work only in that niche and renting very expensive houses by room, extremely updated - to students, flight attendants, resident doctors. They are having twice more income than our regular SFR rented to a family......once you step out of your comfort zone - you might not want to get back

Usually HOA won't foreclosure on you - it cost a lot of money to spend on lawyer and they are the last in line after taxes, mortgages etc.

So, if your loan is non recourse, then just walk away. Give the keys to the bank, negotiate some cash for keys and be done.

Sorry for your loss

Terms of financing is bad, too.

When you count the interest paid plus the price, you might get higher than market value.

That alone is not a big al because he's paying rent to the owner to get his rent and all the interest is tax deductible.

Usually, when you're talking to a seller about financing, you're not talking interest per se.

You don't really need 8.5% on full prices house.

You talk to the seller offering him 2-3 options, for example:

1. Cash price - 28-32K depends on condition 

2. 100 payments on $43K @$430/mo

3. List it for $40K (assuming it's a market value) if you're an agent.

So, it becomes an amortized loan, or you get financing, or you make a comission (OP is an agent)

If I wouldn't have any reserves (not credit cards or HELOC), I'd be on #3 only.

Every asset is coming with liabilities - they're unseparated: you buy a car - you'll need money to drive and change the oil even if it's new......same with a house. Tenant might pay water@landscaping or they might disappear in the middle of night. PM might be a flake and then you have to take over.

You can't consider a possibility of giving keys back to the seller - you have to think everything through the end.

I would take on this deal myself only if I'd manage myself and watch the Tenants all the time....... but I'd structure it differently for sure.  

@Andrey Y. I wouldn't send keys because it will hurt your credit which you might need in future and get you in even worse situation than now.

List property for sale with an agent, take whatever you've offered and be done with that. Even if this will make your losses slightly higher, it will be the closure.

Don't get rid of the problems just walking away - someone else might solve it much worse for you

@Vernal Douglas this case is not that much about loan as it's about bad deal.

For Rent like that, the price of purchase is too high plus, the OP is definitely gambling because he has to borrow even downpayment which is only $500.

If the price was fundable by a bank, the downpayment would be $8K at least and bank would verify seasoning of the funds.

This is too risky from every stand point - that's why so many said NO.  

If he makes money in future, he will be able to meet the reserves and might get through. However, at this price range, chance of something happen is much higher: Tenants are not sustainable, location is questionable, vacancies might be prolonged and bunch of other risks.

OP should have reserves at least 6-8 mo of expenses set aside plus reserve for repairs if property is vandalized.

Disclaimer: I'm not criticizing - I'm pretty risky about my investments also.......so I just tell how it works in real life and what to expect.

 Maybe an agent said it's a B- area :)

 It depends on location, condition of the property (totally updated, no updates, appliances vs none) and how much competition among PM companies. 

Every suburbs in Cleveland, for example, is different. If there is rental inspection, OOS registration, Sec.8 Tenant etc - Nobody will negotiate PM fees - it won't worth the time.

If there is totally updated house in B neiborhood for $1500-1800/mo, I'd negotiate my fees any time. These tenants will be totally different than ones at $850-950/mo

If you're buying at the neighborhoods with rents @$500-550, you'll be lucky to find a decent management company who wants to go through all that hassle

At some point, when you start value your time, you'll become very picky how to invest your time.

Time is more valuable than money because you never make more time.

Just learn how to sort out and don't waste your time on something not worthy.

Until you know the difference, all that is the experience 

 She was offering to pay up the difference but in cash. I don't take cash especially without anyone knowing - I'd be on her hook. BTW, her income was good enough considering that voucher. That was the reason why I would take her - I can't discriminate against the source of income.

But I definitely don't need anyone tell me how much Rent should I charge - only market might.

Also, in these cheap location, there are plenty of applicants. 

After reading these topics, I've got the time for inspection would be the vacancy as well. Why would anyone need that?

In cheap areas there is basicly no turnover time between Tenants - this one was empty because of eviction, but normally one moves out, next day another Tenant moves in